RICE UNIVERSITY

Department of Economics
Economics 209
Applied Econometrics
Spring Semester, 2016

Prof. J. Brown

Course Description and Objectives

This course provides an introduction to empirical methods commonly employed in
economic research. Following a brief review of probability and statistical inference, the
course explores applied regression analysis and related approaches to modeling,
estimation, and hypothesis testing in cross-sectional and panel data settings. The broad
goal of the course is to help students become better consumers and producers of
empirical research. By the end of the course, students should be capable of applying
course principles in their own empirical work and in evaluating the work of others.
Students should also have developed a working knowledge of Stata statistical software.
Economics 209 will not emphasize the use of mathematics purely for its own sake.
Nevertheless, because algebra and calculus are often essential to the development and
empirical testing of economic hypotheses, students should expect to see a considerable
amount of mathematics in this course. Those who are not comfortable with basic
algebra or calculus should be aware that this course will require uncommon effort
throughout the semester. Those hoping to complete the course without immersion in
mathematics should reconsider their plans. There is no such pathway through this
course.

Course Prerequisites
To enroll in this course, students must have credit for ECON 200/301/370 and either
STAT 280 or STAT 310/ECON 307/ECON 382. To do well in this course, you must
thoroughly understand the material covered, and this requires you to have grasped the

content of the prerequisite courses listed above. If you feel that your understanding of
prerequisite material may be deficient, please let me know right away. I will be happy to
help arrange extra review sessions, but I cannot reteach other courses. If your
readiness is too limited, you will be best served by taking (or retaking) STAT 310 before
taking this course.

Course Organization
In addition to the class lectures, weekly lab sessions will provide an opportunity for you
to discuss course assignments and to learn Stata software. Regular attendance at
lectures and labs is a requirement for this course. If you must miss either, please let me
know in advance if possible. If you expect to miss more than a small number of
sessions, you should not take this course. Problem sets or other assignments will occur
roughly weekly. Answers to problem sets will be posted on our OWL-Space site and
discussed in labs or in class. As with most subjects, econometrics is best (and perhaps
only) learned by doing. To do well in this course, it will be imperative that you make
good use of the labs and that you actively seek help when you are confused. Course
exams will presume that you have done so.

Course Readings and Software

The textbooks for this course will be Hill, Griffiths, and Lims Principles of Econometrics,
4th ed. (Wiley, 2011), and Adkins and Hills Using Stata for Principles of Econometrics,
4th ed. (Wiley, 2011). In addition to the text readings, you will be responsible for other
material presented in the form of class handouts. The course will also require frequent
use of STATA software. Students can rent or purchase this software at the following
Web address: https://www.stata.com/order/new/edu/gradplans/student-pricing/ . (Please
note that Stata/IC will be adequate for our purposes, but Small Stata may be
inadequate for some class assignments.)

Requirements and Grading

Your course grade will depend on a midterm exam (30%), a final exam (50%), and a
combined score for class assignments and labs (20%). The final exam will be all
inclusive but will place somewhat greater emphasis on material covered in the latter part
of the semester.

Office Hours and Contact Information

Students can meet with me in Sewall Hall room 305 during the hour following the
morning lecture and in Sewall Hall room 207 during the hour following the afternoon
lecture. Students can also meet with me in Baker Hall room 250 on Wednesdays
between 1:30 and 3:30 (although requests for departmental advising will have to take
precedence during these hours) and at other times by appointment. Students can call
me at Rice campus extension 3343, at 281-636-4560 (cell), or at 281-358-3869 (home).
If you wish to leave a message, you will probably get a quicker response if you use my
home number. I am happy to take calls at my home number any night at around 9:30 or
during the day if Im not already on campus. Of course, you can also contact me by
email ( jbrown@rice.edu ).
Lab sessions will be run by the graduate teaching assistants for the course, Nick
Copeland (ncopeland@rice.edu ) and Mehreen Gul ( mg53@rice.edu ). We will also
have several undergraduate teaching assistants who will offer help sessions in both
group and one-one-one settings. Further information will be posted as soon as
schedules are finalized.

Students with Documented Disabilities

If you have a documented disability that will require accommodations in this course,
please let me know as soon as possible. If you have not done so already, please also
contact Disability Support Services in the Allen Center, Room 111.

Tentative Course Outline

In topical structure, lectures will follow Hill, Griffiths and Lims text fairly closely. Lab
topics will follow the Adkins and Hill text, which itself corresponds chapter-by-chapter
with the Hill, Griffiths, and Lim text. Please note that the following schedule is tentative
and approximate only. The exact pace and detailed subject matter of the course will
depend on students prior preparation and readiness for new topics.

WEEKS

TOPIC

READINGS

1-3

Course introduction and overview

Descriptive statistics for samples
Probability and probability distributions
Sampling and statistical inference

HGL: 1 and
Appendices A-C
AH: 1

3-5

Simple linear regression

HGL: 2-4
AH: 2-4

5-8

Multiple regression
Indicator variables
Treatment effects

HGL: 5-7
AH: 5-7

Midterm Exam

8 - 12

Heteroskedasticity
Random regressors
Simultaneous equations
Instrumental variables

HGL: 8, 10, 11
AH: 8, 10, 11

12-13

Panel data models

HGL: 15
AH: 15

14-15

Qualitative and limited dependent

variable models

HGL: 16
AH: 16

Final Exam